Bay Area Home Sales Up From 2010, Prices Down

November 16, 2011

La Jolla, CA.----The Bay Area housing market logged another month of lackluster activity in October as some of the recent signs of incremental market improvement began to fade. High-end sales dropped markedly, likely the result of changes to “conforming loan” limits, a real estate information service reported.

A total of 6,444 new and resale houses and condos sold in the nine-county Bay Area last month. That was down 4.5 percent from 6,749 in September, and up 5.3 percent from 6,122 in October 2010, according to San Diego-based DataQuick.

Bay Area sales are usually flat from September to October. October sales have varied from 5,486 in 2007 to 13,392 in 2003. The average since 1988, when DataQuick’s statistics begin, is 8,620.

“We’ve been watching the real estate market take itty bitty baby steps in the direction of normalcy, but that trend paused last month. ARM and jumbo loan usage went back down, cash and investor sales went back up as a portion of the market. This may well be a short-term pause while the market recalibrates changes in loan thresholds. We’ll know more in a few months,” said John Walsh, DataQuick president.

The conforming loan limit was reduced Oct. 1 from $729,750 to $625,500 for most Bay Area counties. In Solano County it went from $557,500 to $400,200; in Sonoma County from $662,500 to $520,950.

The median price paid for all new and resale houses and condos sold in the Bay Area last month was $350,000. That was down 4.1 percent from $365,000 in September, and down 8.6 percent from $383,000 in October 2010. Last month’s median was the lowest since last February when it was $337,250.

The low point of the current real estate cycle was $290,000 in March 2009. The peak was $665,000 in June/July 2007. Around half of the median’s peak-to-trough drop was the result of a decline in home values, while the other half reflected a shift in the sales mix.

Last month distressed property sales – the combination of foreclosure resales and “short sales” – made up about 45.4 percent of the resale market. That was the same as in September and down slightly from 46.5 percent a year ago.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 25.3 percent of resales in October. That was down from a revised 25.4 percent in September, and down from 28.6 percent a year ago. Foreclosure resales peaked at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 15 years is about 9 percent.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 20.1 percent of Bay Area resales last month. That was up a hair from an estimated 20.0 percent in September and up from 17.9 percent a year earlier. Two years ago the estimate was 17.0 percent.

Last month 30.3 percent of Bay Area sales were for $500,000 or more, down from 34.2 percent in September, and down from 37.2 percent in October 2010. The low for the current cycle was January 2009, when just 22.7 percent of sales crossed the $500,000 threshold. Over the past 10 years, a monthly average of 47.5 percent of homes sold for $500,000-plus.

The number of homes that sold for $500,000 or more last month fell 20.0 percent from October 2010, while the number of homes sold under $500,000 rose 8.8 percent year-over-year and sales below $300,000 increased 9.6 percent.

Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 21.7 percent of all Bay Area home purchase mortgages in October, the same as in September and down from 25.1 percent a year earlier.

One indicator of mortgage availability that had seen improvement this year dropped again in October, when 12.7 percent of the Bay Area’s home purchase loans were adjustable-rate mortgages (ARMs), down from 12.8 percent in September, and up from 9.1 percent in October last year. The high point for the share of purchase loans that were ARMs was 16.8 percent in June this year. Over the last decade, ARMs have accounted for 51.1 percent of all purchase loans. ARMs hit a low of 3.0 percent of all Bay Area purchase loans in January 2009.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 29.5 percent of last month’s purchase lending, down from a revised 32.1 percent in September, and down from 34.0 percent a year ago. Jumbo usage dropped to 17.1 percent in January 2009. Before the credit crunch struck in August 2007, jumbos accounted for nearly 60 percent of the Bay Area purchase loan market.

Last month absentee buyers – mostly investors – purchased 22.4 percent of all Bay Area homes sold, up from 21.9 percent in September and 19.1 percent a year ago. The peak was 23.4 percent in February this year, while the monthly average since 2000 is 13.9 percent. Absentee buyers paid a median $240,681 in October, down from $250,000 in September and down from $245,000 a year ago.

Buyers who appear to have paid all cash – meaning no corresponding purchase loan was found in the public record – accounted for 28.7 percent of sales in October, up from 27.5 percent in September, and up from 24.2 percent a year ago. The record was 30.5 percent last February, while the monthly average going back to 1988 is 11.8 percent. Cash buyers paid a median $240,000 in October, down from $245,000 in September but up from $239,000 a year earlier.

San Diego-based DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales were estimated in Alameda and San Mateo counties.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $1,348, down from $1,413 in September, and down from $1,504 a year ago. Adjusted for inflation, last month’s payment was 51.3 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 64.0 percent below the current cycle's peak in July 2007.

Indicators of market distress continue to move in different directions. Foreclosure activity remains high by historical standards but below peak levels reached over the last three years. Financing with multiple mortgages is low, down payment sizes are stable, DataQuick reported.


Sales Volume Median Price
All homes   Oct-10   Oct-11   %Chng   Oct-10   Oct-11   %Chng
Alameda              1,252     1,308      4.5%   $365,000    $340,000      -6.8%
Contra Costa         1,333     1,329     -0.3%   $260,000    $250,750      -3.6%
Marin                  205       230     12.2%   $630,000    $602,909      -4.3%
Napa                    91       102     12.1%   $307,000    $310,000       1.0%
Santa Clara          1,374     1,417      3.1%   $502,500    $450,000    -10.4%
San Francisco          436       448      2.8%   $652,000    $635,000      -2.6%
San Mateo              528       566      7.2%   $561,250    $525,000      -6.5%
Solano                 517       554      7.2%   $205,500    $188,000      -8.5%
Sonoma                 386       490     26.9%   $309,000    $283,500      -8.3%
Bay Area             6,122     6,444      5.3%   $383,000    $350,000      -8.6%

Source: DataQuick, www.DQNews.com

Media calls: Andrew LePage (916) 456-7157

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